A brand name product is an easily comparable identical or almost identical product manufactured by the same manufacturer that is freely available from numerous sellers. Brand name products (for example, cars, TVs, and refrigerators) are bought and sold on-line in many different ways.
Under the fixed price approach, brand name products are sold at the manufacture's or retailer's websites at a fixed price. Reference websites apply a variation of the fixed price approach by posting lists of prices of the same product available from multiple sellers. Very often the price list information is not accurate and up-to-date. To achieve maximum value when purchasing a product by the fixed price approach, a potential buyer has to engage in both on-line and off-line negotiations with each particular seller, which is a time consuming and an ineffective process for both parties. The buyer in most cases is not able to receive the best deal because each particular seller is not aware of quotes provided by other sellers. Similarly, because sellers are not aware of quotes provided by other sellers, a particular seller is not able to provide a competitive quote.
A referral service is another way of buying and selling brand name products online. A buyer specifies the product and provides contact information and the referral service informs a limited number of sellers (usually local) of the potential buyer. Sellers then begin to contact the potential buyer. To achieve maximum value, the buyer has to engage in both an on-line and off-line negotiation process with each particular seller. The referral method is widely used in buying and selling vehicles. Examples include www.autobyte1.com, www.edmunds.com, autos.msn.com, autos.yahoo.com, and www.kbb.com. A referral service has the same limitations and disadvantages as the fixed price approaches.
A reverse auction where invited sellers bid to win a deal is another way for a potential buyer to achieve a better price for a brand name product. Designed to achieve the best price, a reverse auction has many limitations that prevent a buyer from gaining the best value. While price is one of the most important parameters that a buyer considers when making a purchase decision, parameters such as availability of the product, cost of delivery, warranty, customer service, financing and other seller value added products and services are also very important to a buyer
Thus, existing systems require time consuming and inefficient negotiations between the buyer and seller, do not allow the buyer to achieve the best price, do not allow the seller to provide value in addition to price, and do not allow the buyer to consider the additional value in the buyer's decision making process.